MIAMI — Sandy Kemper, a strapping midwesterner who shaves his head bald, does not look like an easily intimidated man.

But on Monday he was fretting about PayPal Inc., an Internet payment business that has ballooned with remarkable speed by targeting the needs of people conducting e-commerce.

Since Mr. Kemper, the former chairman and chief executive of $9 billion-asset UMB Financial Corp., founded eScout.com LLC as a spinoff of UMB two years ago, he says his appreciation for the darker side of the opportunity-laden world of electronic commerce has grown.

“PayPal scares the hell out of me because they are creating a parallel network to what we have spent generations creating,” he told an audience at the Bank Administration Institute’s B2B eCommerce conference here. “I am worried that with attackers like that, if we don’t get electronic commerce right, we are going to lose payments.”

As chief executive officer of eScout.com, Mr. Kemper said he has been doing his bit to ward off the corporate piranhas that would encroach on the bank-run payment system. He said eScout has signed up more than 9,000 small and midsize businesses to participate in electronic marketplaces that offer discounts on name-brand office products and services.

More than 1,800 small and midsize banks, with assets totaling $380 billion, serve as intermediaries by signing up their business customers for the network and executing payments through traditional bank mechanisms like the automated clearing house.

Payments and all the derivative transactions that they trigger “enable banks to be the most successful players in electronic commerce,” Mr. Kemper said.

PayPal is processing 150,000 transactions a day through its independent network, he said, but it is hardly the only competitor vying for a piece of payments now that the Internet has opened up unprecedented entry points.

Large corporations also are trying to get into banking through the back door by using the products they distribute over the Internet, Mr. Kemper said. Customers who make purchases on a large corporation’s site can click on a finance button that goes to a company-owned bank, as opposed to an independent bank, he said.

“The endgame of successful companies like General Electric and General Motors is banking,” he said. “These companies are using products as a Trojan horse to get to payments.”

But just as large corporations can use products to open the door to payments, banks can use commerce, he said. “If payments are the trigger, commerce is the finger on the trigger.”

Banks need to move quickly to take advantage of growing payment opportunities before the business is decimated in the same fashion that traditional asset-based banking has been, he said. “Fifty years ago banks controlled 95% of financial assets,” Mr. Kemper said. “Now they control 20%.”

And banks still have plenty of weight to throw around in a business that will need to support an estimated $4.8 trillion of business-to-business electronic commerce transactions by 2004.

Mr. Kemper pointed to data from Forrester Research Inc. of Cambridge, Mass., to show that banks are positioned to control payments. Only 30% of business-to-business marketplaces execute more than 100 transactions per month, according to Forrester.

“We own payments,” Mr. Kemper said. “And by building a payment system we can do a lot more than 100 transactions per month.”

However, small businesses stand to gain the most from Internet-based business models, Mr. Kemper said. UMB lost $150 million of loans in his last year as CEO of the Kansas City, Mo., banking company because so many small-business customers had to sell out to large businesses, he said.

Individually, small businesses lack the scale, capital, and brand recognition to compete against large corporations, he said, but they can fill all three of those needs by banding together on the Internet to save money and operate in larger markets.

By helping small businesses do just that, banks would fulfill the same role as commerce enablers they have played for centuries, Mr. Kemper said. “Banks were opened to help their customers reach financial success, and electronic commerce can do that.”

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